When you sell a property, there is a chance you will have to pay Capital Gains Tax. Capital Gains Tax is the tax you pay on the increase in value you’ve incurred on the property. There are 2 types of Capital Gains Tax we will discuss:

Short-Term Capital Gains – This is when you buy and sell a property in less than one year. This type of capital gains is taxed at a higher tax rate.

Long-Term Capital Gains – This is when you buy and sell a property in more than one year. This type of capital gains is taxed at a lower tax rate.

If a property is owned by an individual, or an LLC with individual owners, Short Term Capital Gains will be the same as your normal income tax rate. Later we will show you the tax breaks you get when the investment is long term capital gains. Remember, Short Term Capital Gains is when you buy and sell your property in less Than One Year.

If your investment was owned for more than 1 year, then Long Term Capital Gains will apply. This is generally lower than Short Term Capital Gains. Long Term Capital Gains also gives you a 0% tax bracket up to $38,600. Again, this bracket below is for investors that own a property under their individual names, or an LLC owned by individual members.